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King Pharmaceuticals, Inc. v. Eon Labs

September 28, 2010

KING PHARMACEUTICALS, INC., ET AL., PLAINTIFFS/COUNTERCLAIM DEFENDANTS,
v.
EON LABS, INC., DEFENDANT/COUNTERCLAIM PLAINTIFF,
v.
ELAN PHARMACEUTICALS, INC., COUNTERCLAIM DEFENDANT.



The opinion of the court was delivered by: Roanne L. Mann, United States Magistrate Judge

MEMORANDUM AND ORDER

Currently pending before this Court, on a referral from the Honorable David G. Trager, is a motion filed by defendant/counterclaim plaintiff Eon Labs, Inc. ("Eon") to eliminate the confidentiality designation of briefs submitted in support of and opposition to Eon's Motion for Determination of Exceptional Case. See Letter to Judge Trager Regarding Dispute (June 2, 2009) ("Eon 6/2/09 Letter"), ECF Docket Entry ("D.E.") #313; [Referral] Order (Jan. 14, 2010) ("1/14/10 Order"), D.E. #347. The unsealing motion is opposed by plaintiffs/counterclaim defendants King Pharmaceuticals, Inc. and King Pharmaceuticals Research and Development, Inc. (collectively, "King") and by counterclaim defendant Elan Pharmaceuticals, Inc. ("Elan"). See Letter Response to Eon's Letter (June 5, 2009) ("King 6/5/09 Letter"), D.E. #315; Letter [from] Kevin J. McKenna to Judge Trager (June 5, 2009) ("Elan 6/5/09 Letter"), D.E. #316; see also Letter Addressing the King Letter and Elan Letter (June 10, 2009) ("Eon 6/10/09 Reply"), D.E. #318. For the reasons that follow, Eon's motion to unseal is granted in its entirety.

FACTUAL BACKGROUND

King sued Eon for infringement of U.S. Patents Nos. 6,407,128 ("'128 patent") and 6,683,102 ("'102 patent"), which disclose methods of increasing the bioavailability of metaxalone (marketed by King as "Skelaxin®") by administering the drug with food. Elan is King's predecessor -- King purchased the '128 patent from Elan and then filed a continuation patent application, which resulted in the issuance of the '102 patent. On January 20, 2009, in response to a summary judgment motion filed by Eon, Judge Trager issued a Memorandum and Opinion declaring those patents invalid as a matter of law. See Memorandum and Order (Jan. 20, 2009) at 32, D.E. #290, reported at 593 F.Supp.2d 501.*fn1 Thereafter, Eon filed its Motion for Determination of Exceptional Case. See Notice of Motion for Attorney Fees and Determination of Exceptional Case, D.E. #305. Judge Trager denied the motion for fees on September 28, 2010. See Memorandum and Order (Sept. 28, 2010) ("9/28/10 M&O"), D.E. #356. The issue before this Court is whether the briefing in support of and opposition to that motion should remain under seal.*fn2

The confidentiality designations at issue were made pursuant to a stipulated protective order that allowed the producing party to designate any material as confidential, without a showing of good cause, based on a good faith belief in the need for confidential treatment. See Amended Protective Order ("Stipulation") ¶ 2, D.E. #19.*fn3 The agreed-upon document further provided that

[i]n the event that any party disagrees at any stage of the proceedings with such [a confidentiality] designation, such party shall . . . first try to dispose of such dispute in good faith on an informal basis. If the dispute cannot be resolved within ten days of the challenging party's written notice, the party challenging the designation may then request appropriate relief from this Court. The burden of proving the information has been properly designated . . . is on the Producing Party making such designation.

See Stipulation ¶ 10.

After informal attempts failed to resolve the instant dispute within ten days, Eon requested relief from Judge Trager. See Eon 6/2/09 Letter at 2, D.E. #313. Both King and Elan submitted responsive letters opposing the unsealing of the briefs, and Eon replied to those objections. See King 6/5/09 Letter; Elan 6/5/09 Letter; Eon 6/10/09 Reply. King then submitted redacted briefs, with Elan's acquiescence, see Letter Proposing Redacted Briefing (June 15, 2009) ("King 6/15/09 Letter"), D.E. #320; Letter to Judge Trager (June 15, 2009) ("Elan 6/15/09 Letter"), D.E. #321; and Eon's counsel requested that those redacted briefs be made available to his clients. See Motion to Unseal Document (June 17, 2009) ("Eon 6/17/09 Letter"), D.E. #322.

On June 25, 2009, Judge Trager issued a Memorandum and Order requiring King and Elan to submit letters identifying "each piece of allegedly confidential information contained in the unredacted briefs," with "detailed reasons why each piece of information should remain sealed." Memorandum and Order (June 25, 2009) ("6/25/09 M&O") at 2, D.E. #324 (emphasis in original). Judge Trager further ordered that King and Elan identify confidential information belonging to third parties, and that "any third parties wishing to submit a letter regarding their allegedly confidential information shall do so within 14 days . . . ." Id. at 3. The Court reminded the parties that "the burden is on the party producing allegedly confidential information to show that it[']s properly designated as confidential if that designation is challenged," and concluded that "Eon has adequately identified the information it believes has been improperly designated as confidential." Id. at 2 (citing Stipulation ¶ 10). Thereafter, Elan, King, and non-party Mutual Pharmaceutical Company, Inc. ("Mutual") each filed letters identifying those portions of the briefing that they believed should remain redacted and under seal. See Letter Motion for Protective Order (July 9, 2009) ("Elan 7/9/09 Letter"), D.E. #333; Sealed Letter to Judge Trager (July 9, 2009) ("King 7/9/09 Letter"), D.E. #334; Letter Dated 7.10.09 By Mutual Pharmaceutical Company, Inc. (July 10, 2009) ("Mutual 7/10/09 Letter"), D.E. #335.*fn4

On January 14, 2010, Judge Trager issued a referral order, pursuant to which the undersigned magistrate judge is to determine "[t]he issue of whether the unredacted briefs in this case contain any confidential information of the counterclaim defendants or any third parties, such that they should remain sealed." 1/14/10 Order. For the reasons that follow, this Court orders that the briefs be unsealed in their entirety, as they contain no confidential information warranting sealing and/or redaction.

APPLICABLE LEGAL PRINCIPLES

I. Reliance on a Stipulated Protective Order

Rule 26(c) of the Federal Rules of Civil Procedure governs a court's power to issue an order "to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense . . . ." Fed. R. Civ. P. 26(c)(1). "The touchstone of the court's power under Rule 26(c) is the requirement of 'good cause.'" In re Zyprexa Injunction, 474 F.Supp.2d 385, 415 (E.D.N.Y. 2007); see also Fed. R. Civ. P. 5.2(e)(1) ("For good cause, the court may by order in a case . . . require redaction" of information other than social security numbers and other data expressly protected under Rule 5.2(a)). To establish good cause, a party must demonstrate that "a 'clearly defined and serious injury' . . . would result from disclosure of the document." Allen v. City of New York, 420 F.Supp.2d 295, 302 (S.D.N.Y. 2006) (citations omitted); J. Moore, 6 Moore's Federal Practice & Procedure § 26.104[1], at 510-12 (3d ed. 2009).

In this case, King and Elan argue, among other things, that the challenged redactions should be maintained because third parties relied in good faith on the Court's issuance of a protective order. See King 7/9/09 Letter at 2-3; Elan 7/9/09 Letter at 4-5. Although reasonable reliance on a previously granted protective order may create a presumptionagainst disclosure, see Martindell v. Int'l Tel. & Tel. Corp., 594 F.2d 291, 296 (2d Cir. 1979), the law is clear that the Martindell presumption against disclosure does not apply where, as here, confidentiality designations are made without a showing of good cause. See Schiller v. City of New York, No. 04 Civ. 7922 KMK JCF, 2007 WL 136149, at *3 (S.D.N.Y. Jan. 19, 2007) ("Where a protective order permits parties to designate discovery materials as 'Confidential' without a showing of good cause, and one party challenges a designation made by another, the challenging party is not seeking to modify the protective order and therefore does not bear the burden of demonstrating that the confidentiality designations should be lifted.").

Moreover, the Martindell presumption applies only to those materials produced "under a protective order when there was reasonable reliance upon such an order . . . ." S.E.C. v. TheStreet.com, 273 F.3d 222, 231 (2d Cir. 2001). Here, however, the order on which the non-parties are alleged to have relied expressly provided a mechanism for challenges to confidentiality designations. See Stipulation ¶ 10. As a consequence, any reliance on that order "is insufficient to outweigh the strong presumption in favor of public access" to court records. Diversified Group, Inc. v. Daugerdas, 217 F.R.D. 152, 160 (S.D.N.Y. 2003); accord Gambale v. Deutsche Bank AG, 377 F.3d 133, 142 n.7 (2d Cir. 2004) ("[P]rotective orders that are on their face temporary or limited [do] not justify reliance by the parties.")

(quoting TheStreet.com, 273 F.3d at 231); Lugosch v. Pyramid Co. of Onondaga, 435 F.3d 110, 126 (2d Cir. 2006); Allen, 420 F.Supp.2d at 301. In other words, because the confidentiality designations in this case were made without a showing of good cause, the Court affords no weight to the previous grant of what King and Elan characterize as a protective order. Rather, the burden remains on the party resisting disclosure to demonstrate good cause for maintaining confidentiality, pursuant to Rules 26(c) and 5.2(e). See U2 Home Entm't, Inc. v. Kylin TV, Inc., No. 06-CV-2770 (DLI), 2008 WL 1771913, at *2 (E.D.N.Y. Apr. 15, 2008) (where "the confidentiality designation is contested, the party seeking to maintain confidential treatment for the challenged document will have the burden of establishing good cause for the continuation of that treatment") (quoting Lachica v. City of New York, 94-CV-7379 (LAK), 1995 WL 77928, at *1 (S.D.N.Y. Feb. 23, 1995)). Because "the document[s] sought to be shielded from disclosure [are] part of the official court file, the Court must consider the public's presumptive right of access to such materials in making its determination as to good cause." Nycomed U.S., Inc. v. Glenmark Generics, Inc., No. 08-CV-5023 (CBA), 2010 WL 889799, at *2 (E.D.N.Y. Mar. 8, 2010).

II. The Presumptive Right of Public Access

"The courts have long recognized a common law right of public access to judicial documents." Stern v. Cosby, 529 F.Supp.2d 417, 420 (S.D.N.Y. 2007) (quotations and citations omitted); see, e.g., Lugosch, 435 F.3d at 119. The public's "right to inspect and copy . . . judicial records and documents," Nixon v. Warner Commc'ns, Inc., 435 U.S. 589, 597 (1978), is "founded upon the public's interest in monitoring the judiciary's administration of justice." United States v. Basciano, Nos. 03-CR-929, 05-CR-060, 2010 WL 1685810, at *2 (E.D.N.Y. Apr. 23, 2010) (citing United States v. Amodeo, 71 F.3d 1044, 1048 (2d Cir. 1995) ("Amodeo II")). As the Second Circuit explained:

Transparency is pivotal to public perception of the judiciary's legitimacy and independence. The political branches of government claim legitimacy by election, judges by reason. Any step that withdraws an element of the judicial process from public view makes the ensuing decision look more like fiat and requires rigorous justification.

United States v. Aref, 533 F.3d 72, 83 (2d Cir. 2008) (quotation and citation omitted).

Nevertheless, the common law right to inspect and copy judicial documents is a qualified right, not an absolute one. See Nixon, 435 U.S. at 598; accord United States v. Graham, 257 F.3d 143, 149 (2d Cir. 2001). The right of public access gives rise to a rebuttable presumption of public availability, the weight of which presumption "must be governed by the role of the material at issue in the exercise of Article III judicial power and the resultant value of such information to those monitoring the federal courts." Amodeo II, 71 F.3d at 1049. In applying this presumption, "'a judge must carefully and skeptically review sealing requests to insure that there really is an extraordinary circumstance or compelling need' for the request." Mariano v. La Fitness, Inc., No. CV 09-1395(LDW)(ETB), 2010 WL 1459383, at *1 (E.D.N.Y. Apr. 13, 2010) (quoting Video Software Dealers Ass'n v. Orion Pictures Corp., 21 F.3d 24, 27 (2d Cir. 1994)).*fn5

"The Second Circuit has set forth a three-part analysis for determining whether documents relating to a lawsuit must be made available to the public." Stern, 529 F.Supp.2d at 420 (citing Lugosch, 435 F.3d at 119-20; Amodeo II, 71 F.3d at 1048-52).

First, the court must determine whether the documents are indeed judicial documents, to which the public has a presumptive right of access. Second, if the documents are judicial documents, the court must determine the weight of the presumption, that is, whether the presumption is an especially strong one that can be overcome only by extraordinary circumstances or whether the presumption is a low one that amounts to little more than a prediction of public access absent a countervailing reason[,] or whether the presumption is somewhere in between. Third, once the weight of the presumption is determined, a court must balance competing ...


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